Fin 100 Week 9 Homework

Homework Week 9Problem 1Pretty Lady Cosmetic Products has an average production process time of forty day. Finished goods are kept on hand for an average of fifteen days before they are sold. Accounts receivable are outstanding an average of thirty-five days, and the firm receives forty days of credit on its purchases from suppliers. Estimate the average length of the firm’s short-term operating cycle. How often would the cycle turn over in a year?Pretty Lady Cosmetics Product cash conversion cycle CCC = DIO + DSO - DPO(i.e.) CCC = 15+35-40 = 10 daysOperating cycle CC begins when the firm rx obtain raw material for production till realization of sales. Therefore, OC = 40+15+35-40 = 50 daysAnnual Sales = $1200, 000Assume net sales of $1,200,000 and cost of goods sold of $900,000. Determine the average investment in accounts receivable, inventories, and accounts payable. What would be the net financing need considering only these three accounts?Annual Sales = $1200, 000COGS = $900,000Days Inventory Outstanding (DIO): This indicates or addresses the question of how many days it takes to sell the entire inventory. It is advantageous if this number is minimal.DIO = Average inventory/COGS per day =